Question

Which of the following is true about pro-forma financial statements?

a. Pro-forma financial statements are not required to follow GAAP.

b. Pro-forma financial statements CANNOT use future revenue projections when being prepared.

c. Pro-forma financial statements are a consolidation of line items from the balance sheet and income statement.

d. Pro-forma financial statements must follow accounting standards set forth by the Accounting Association Board.

Answer 1

Ans :

a. Pro-forma financial statements are not required to follow GAAP. FALSE -pro farma statements as per SEC requirement need to follow GAAP format and reporting

b. Pro-forma financial statements CANNOT use future revenue projections when being prepared. FALSE  Pro-forma financial statements used for future projection and past comparison.

c. Pro-forma financial statements are a consolidation of line items from the balance sheet and income statement. FALSE Pro-forma financial statements are not consolidation of balance sheet and income statement items. Pro forma statements are made different for income statement and B/S items.

d. Pro-forma financial statements must follow accounting standards set forth by the Accounting Association Board.

TRUE: Pro-forma financial statements require to follow FASB requirements and directives